By Robert Stitt
We’ve been told that college is a game changer. Go to college and it will open doors for you. There will finally be opportunities available that were once reserved for the privileged few. What they didn’t tell you is that there were hidden costs associated with this education.
Granted, student loans are not truly “hidden” costs, but what is not widely known is that if you are a minority student, you will statistically have to take out more loans than an Asian or white college student. They also won’t tell you that if you are a Latino or black graduate, you are likely to make less coming out of college than your Asian and white counterparts. This equates to more debt and fewer means to pay it off – a hidden “cost” of higher education for brown and black students.
Prior to the “Great Recession” college grads from all walks of life got jobs and bought homes. Things were looking up, the future was bright, and the debts could be paid off. When the recession hit, everybody lost, but Latino and black grads lost the most. In fact, on average, black grads lost almost 60 percent of their net worth from 2007 and 2013, Latinos lost nearly 72 percent. One reason for this loss was the decrease in median salaries. For black grads during these years, the average income dropped over 17 percent, nearly 16 percent for Latinos. Asian and white grads, on average, had salaries that continued to rise.
In addition to the lower salaries, black and Latino homeowners were hit hard when the housing market collapsed. The loss of home value and/or the home itself took a huge toll on the net worth of these grads. Combine the loss in salary and home equity to the large student loans that are still hanging over their heads, and the financial picture got pretty bleak.
It’s not just this generation that is impacted by the debt, however. One reason that black and Latino students needed to take out so many large loans was a lack of cash reserves and family support that many white and Asian students had. What was supposed to be a way out has, for many, turned into an even bigger burden that impacting their children and grandchildren. Instead of making more money, building wealth and helping the next generation, they are trapped under a mountain of debt. If their children are not scared off from a college education by the struggles of their parents, they will have to follow in their footsteps and pay their way toward the hope of a brighter future.